UK house prices fall 2.3% in November – the biggest monthly drop in over a decade
HOUSE prices fell by 2.3% in November, the biggest monthly drop in over a decade, Halifax said.
The bank’s index showed annual house price growth slowed to 4.7%, from 8.2% in October.
Meanwhile, the average UK house price was £285,579, down from £292,406 last month, an over £6,000 drop.
Kim Kinnaird, director of Halifax Mortgages, said: “The monthly drop of 2.3% is the largest seen since October 2008 and the third consecutive fall.
“While a market slowdown was expected given the known economic headwinds – and following such extensive house price inflation over the last few years (19% growth since March 2020) – this month’s fall reflects the worst of the market volatility over recent months.
“Some potential home moves have been paused as homebuyers feel increased pressure on affordability and industry data continues to suggest that many buyers and sellers are taking stock while the market continues to stabilise.”
Halifax’s index is just one measure of house prices, although other banks have said house prices are falling too.
On December 1, Nationwide said they dropped 1.4% between October and November.
The high street bank said house prices fell by 0.9% between September and October too, showing signs the housing market is cooling.
The house price slowdown comes after mortgage rates hit a 14-year high in September.
The spike was caused by political and economic turmoil following former Chancellor Kwasi Kwarteng’s mini-Budget.
They’ve since come down from that high.
Moneyfacts said typical two and five year mortgage deals have come down below 6% for the first time in two months.
But they still remain higher compared to last year.
The average two-year deal stood at 2.34% at the start of December last year, before the Bank of England introduced a number of base rate hikes.
It’s meant people looking to buy homes are holding off which is having an impact on the housing market.
It comes amidst the cost of living crisis with households already contending with increased energy bills and food prices.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, added: “We’re not yet in the realms of annual price falls, but if this pace continues, it won’t be long until we are.
“What’s even more worrying is that it takes around three months for a sale to move from being agreed to being completed, so these figures reflect sellers’ decisions in August – before the disastrous mini-budget.
“It means that buyers were already getting cold feet before Kwasi Kwarteng’s announcement forced mortgage rates through the roof.”
Halifax said house price annual growth slowed in all parts of the UK apart from the North East.
It added Wales and south-west England recorded particularly strong slowdowns in annual house price growth.
It comes after house prices generally shot up in the last two years after the government introduced a stamp duty holiday and people looked for more space outside of cities.
Alice Haine, personal finance analyst at Bestinvest said: “Britain’s housing market is succumbing to the wider gloom affecting the economy following the dizzying price rises seen during the pandemic.”
Emma Cox, managing director of Shawbrook Bank, meanwhile said: “The combined effects of double-digit inflation, alongside the UK’s slow march into recession is keeping many would-be first time buyers away from entering the market.”
Nationwide said the average house prices and annual increases are as follows:
- East Midlands, £244,429, 9.5%
- Eastern England, £339,683, 7.3%
- London, £549,160, 5.2%
- North East, £173,587, 10.5%
- North West, £229,218, 9.4%
- Northern Ireland, £185,097, 9.1%
- Scotland, £203,132, 6.5%
- South East, £397,562, 7.6%
- South West, £307,750, 8.4%
- Wales, £220,689, 7.9%
- West Midlands, £253,253, 9.4%
- Yorkshire and the Humber, £207,800, 9.3%
What will happen to house prices in the coming months?
Experts are predicting house prices will continue to fall over the coming months as increased mortgage rates keep potential buyers off the market.
Nick Morrey, technical director at mortgage brokers Coreco, previously told The Sun house prices may fall by up to 10% over the next year.
“A fall in prices after two very strong years and the cost of living rising was anticipated,” he said.
“We can expect this to continue through into 2023 but settle down as the year progresses.”
Meanwhile, James Forrest, managing director of estate agent Barrows and Forrester, said: “It’s important that we view recent declines in context, as we are now merely starting to see a return back to pre-pandemic norms.”
The drop in house prices is good news for first-time buyers wanting to get onto the ladder, but with mortgage rates higher than before it might be harder to get approved for one.
Most people will see a drop in the value of their home, raising fears of households falling into negative equity.
This is when a house or flat is worth less than when you took out a mortgage on it.
But because prices have gone up so much in recent years, this probably won’t be the case.
Despite recent drops in house prices, year-on-year they’re still up.
Nationwide’s House Price Index said the average price of a home in November 2021 was £252,687, over £10,000 less than November this year.
Rhys Schofield from Peak Mortgages, said: “House prices having probably increased by 20% in the last two years so most homeowners have still done very well in the 2 ½ years.”